How rare earth minerals could give China the upper hand in U.S. trade talks

As U.S. and Chinese negotiators meet for trade talks, a primary concern for Washington will be whether Beijing eases the flow of rare earth materials.

As U.S. and Chinese negotiators meet for trade talks in London this week, a primary concern for Washington will be whether Beijing eases the flow of rare earth materials, which have become key components of modern life.

China dominates the global supply chain for rare earths, mining about 70% and refining 90% of the materials used to produce everything from wind turbines and defense equipment to electric vehicles and car seats. The United States produces virtually none of the world’s rare earths, whose extraction can be devastating for the environment.

That economic vulnerability has come into sharper focus since April, when China imposed export controls on seven strategic rare earth metals and related magnets amid an escalating trade war with President Donald Trump. Companies, especially automakers and business associations in the U.S., Europe and elsewhere have sounded the alarm, warning that China’s rare earth restrictions risk delays that could bring manufacturing to a halt.

Kevin Hassett, director of the National Economic Council, told CNBC on Monday that U.S. negotiators in London were seeking a “handshake” from China on rare earths after Trump said last week that Chinese President Xi Jinping had agreed to resume their flow in the first call between the two leaders since Trump returned to office.

“They were kind of releasing them, but it was going a lot slower than some companies believed was optimal,” Hassett said.